Indian misfortunes, Thai transformation keynote another somber year of stagnant supply growth.

By Eric J. Brooks

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One of CP's new RAS-based Thai shrimp growing facilities. From 18% a year ago, 30% of CP's shrimp are now raised in RAS facilities. It hopes to raise all its Thai shrimp in biosecure, resource-efficient RAS farms by 2023.

The last ten years have seen certain unwavering world shrimp market constants: First, every time the industry looks set to embark on a new cycle of strong, consistent growth, it gets hit with another setback.

Second, maxed out pond area with declining production in China and Thailand was more than offset by double-digit annual growth in Indian and Ecuadorian shrimp output, where high prices drove the expansion into new, untapped frontier areas. Assumption #2 –and world shrimp output growth– are starting to falter.

On one hand, India's once rapid growth is now retreating into stagnation. After exponential shrimp output growth from barely 100,000 tonnes in 2009 to 700,000 tonnes in 2017, mounting problems controlling EMS, WFD and WSSV outbreaks in aging ponds inflated production costs even as shrimp prices slumped. For most of 2018, Indian shrimp's US export price was up to 30% below the 2014-15 average and 20% below its average 2016-17 price.

This year's deflation was the result of China's crackdown on shrimp import smuggling via Vietnam. It shifted a portion of shipments meant for China to a world market already bloated by high US inventory levels, causing prices to languish near depressed mid-2018 levels.

As this undermined shrimp farming returns, many Indian producers minimized their losses by keeping a large number of ponds fallow. Amid mounting disease outbreaks, older ponds had their stocking densities reduced so as to reduce the frequency of white spot and white feces disease infections, which became a serious issue after 2016. Consequently, 2018 production slumped back 7% to an FAO-estimated 650,000 tonnes.

Despite all these challenges, many Indian shrimp farming executives remained optimistic about achieving a million tonnes of output by 2020 –but 2019 is not allowing that to happen. First prices slumped back to mid-2018 lows, undermining returns. That caused many farmers to cut back on re-stocking.

This was followed by unusually dry conditions in late Q1 and early Q2, which held back pond quality and shrimp growth. Depending on the region, industry reports stated H1 2019 pond stocking levels were reduced by 20% to 30% from 2018 levels, but it was still hoped prices and output would recover in the second half of the year –which would still have made for a 10% to 15% drop in output from 2018 levels.

Matters were made worse by early May's Cyclone Fani, whose tidal surge washed away entire shrimp farms along eastern India's Odisha coast. This region's output losses are believed to have contributed at least 45,000 tonnes of exports in 2018.

With shrimp prices continuing to languish at low levels, unusually heavy monsoon caused the Godavari river that runs through Andhra Pradesh to experience severe flooding. As this state accounts for 60% to 70% of annual production, regional farmers interviewed by Undercurrent News expect this disaster to reduce national shrimp output by another 5%.

On one hand, thanks to a late 2017/early 2018 production surge, India's 2018 shrimp exports defied last year's lower output volume, growing to an FAO estimated 615,000 tonnes. On the other hand, 18 months of downtrending shrimp production means that India's 2019 shrimp exports are poised for a steep decline. While some industry stakeholders project 2019 output of below 500,000 tonnes, even a more optimistic 550,000-tonne estimate implies 2019 exports of under 500,000 tonnes.

The good news is that Ecuador is still doing well, boosting its export volume from 510,000 tonnes in 2018 to a projected 610,000 tonnes this year. The bad news is that India's projected 130,000 to 170,000-tonne drop in 2019 shrimp exports more than offsets higher Ecuadorian shipments. With the exports of other suppliers rising by barely a collective 100,000 tonnes, we are looking at either negligible or no growth in world shrimp exports.

In sum, low prices, poor returns, voluntary stocking reductions and subsequent bad weather is poised to reduced India's shrimp output for a second consecutive year and by 15% to 20%, into the 520,000 tonnes to 550,000-tonnes range (though some observers claim output could fall below 500,000 tonnes). –All this is a far cry from the million-tonne output many Indian shrimp farming executives predicted for 2020 just one year ago.

While India grapples with its shrimp farming troubles, shrimp farming's most technologically advanced nation is trying a new approach. Thailand hopes that its decade of misery is nearly at an end. After EMS and EHCP broke out in Thai ponds in 2011, they became chronic, output limiting factors. Since then, Thailand has only managed to produce slightly over 50% of its peak 640,000 tonnes shrimp output of ten years ago without these diseases and die-offs occurring.

Rather than fight a battle it can't win, Thailand is moving to a new, ecologically friendlier growth model: In Q4 2018 CP announced its intention to migrate all its shrimp production from traditional outdoor ponds to indoor recirculating aquaculture systems (RAS). An August 1st 2019 article in Shrimp News stated that the proportion of CP's RAS grown Thai shrimp has jumped from 18% in early 2019 to 30% as of Q3. By 2023 CP expects to grow all its Thai shrimp in biosecure RAS operations.

According to CP executive vice president of aquaculture business Premsak Wanuchsoontorn "We have so far, experienced no disease outbreaks in our RAS systems and use no antibiotics." At the very least, this implies that going forward, Thai shrimp will not be subject to Indian or Vietnamese style export bans, which were imposed due to high antibiotic levels or the presence of banned supplements. RAS's compartmentalized biosecure infrastructure also means that "Should problems be encountered, the affected animals can quickly be isolated and the outbreak contained."

Best of all, RAS promises that the peak stocking densities can be exceeded in a sustainable, additive-free manner. Wanuchsoontorn stated that whereas well-managed outdoor systems yield 20 to 30 tonnes/hectare, IT-managed RAS control systems can achieve 60 to 70 tonnes/hectare.

–Moreover, the doubling of productivity is complemented by a 60% to 70% reduction in water usage. This is important, as RAS-based shrimp cultivation's higher start-up costs can be partly offset by lower operating expenses.

If CP succeeds in a profitable manner, we can expect its rival Thai shrimp integrators to follow in adopting RAS-based shrimp cultivation. If Thailand can thereafter sustainably grow its shrimp output back to its previous 600,000 tonnes + level, China, Malaysia, and other disease-constrained nations would probably follow, thereby triggering a new cycle of rapid shrimp farming growth not seen since 2010.

Consequently, 2019's stagnant shrimp output holds two important lessons: On one hand, India's mounting disease woes betray the unsustainability of today's shrimp farming model: Beyond a certain age, a large proportion of outdoor shrimp ponds appear to become unusable; after a few decades of growth, the supply of new, clean ponds runs out.

Thailand pioneered the current, unsustainable paradigm –and may just be developing a new, sustainable means of boosting production without exhausting a limited supply of virgin, frontier growing ponds.

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